Contractor Business Systems –Earned Value Management ...

[Pages:27]McKenna Government Contracts, continuing excellence in Dentons

Contractor Business Systems ? Earned Value Management, Material Management and Accounting, and Property Management

Michael McGuinn, Dentons Michael Steen, Redstone Government Consulting

May 24, 2016

Agenda

? Business Systems Rule overview ? Earned Value Management System (EVMS)

? Project planning that integrates project scope with cost, schedule and performance tracking metrics

? Material Management and Accounting System (MMAS)

? Accounting for the acquisition, use, and disposition of materials

? Property Management System

? Acquiring, tracking and disposing of government property

? Questions

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Overview of the Business Systems Rule

? Interim Rule published May 2011, Final Rule published Feb 2012

? Interim rule (76 Fed. Reg. 28,856 (May 11, 2011)) ? Final rule (77 Fed. Reg. 11,355 (Feb. 24, 2012))

? Applicable through clauses in DFARS, CAS-covered contracts awarded after May 2011

? Other agencies (e.g., DOE) adopting/applying DFARS criteria

? Disapproved system results in withholding from:

? Progress payments ? Performance based payments ? Interim payments under cost, T&M, and labor-hour contracts

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Earned Value Management Systems: Applicability

? DFARS EVMS Clause, 252.234-7002, required in all cost or incentive contracts valued at $20 million or more

? May also be required for other contracts based on government risk assessment and cost/benefit analysis

? Use of EVMS in FFP contracts discouraged, waiver required

? Clause requires DOD-approved EVMS for contracts valued at more than $50 million

? If system not approved at time of contract award, contractor is required to apply its current system and comply with its EVMS plan milestones

? For contracts below $50 million, DOD will not determine whether system complies with EVMS guidelines

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Earned Value Management Systems: Requirements

? Acceptable EVMS requires:

? An EVMS that complies with the 32 guidelines in the American National Standards Institute/Electronic Industries Alliance (ANSI/EIA) Standard 748, Earned Value Management Systems

? System disapproval required if significant deficiency found related to 16 ANSI/EIA-748 standard high risk guidelines (guidelines 1, 3, 6, 7, 8, 9, 10, 12, 16, 21, 23, 26, 27, 28, 30, or 32)

? System may be disapproved in CO's discretion if significant deficiency found in any of the remaining 16 guidelines

? Management procedures that provide for generation of timely, reliable, and verifiable information for the Contract Performance Report (CPR) and the Integrated Master Schedule (IMS)

? Integrated Program Management Report being phased in to replace CPR and IMS

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Earned Value Management Systems: Requirements (cont.)

? Contractors required to submit to DOD notification of any proposed substantive changes to its EVMS procedures and impact of those changes

? Contracts greater than $50 million require advance approval of changes

? Contractors also required to provide access to DOD for purposes of EVMS approval and surveillance

? Reviews typically conducted at time of award or after major contract actions as part of integrated baseline review

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Earned Value Management Systems: DOD Guide

? DOD Earned Value Management Systems Interpretation Guide (EVMSIG) issued on Feb. 18, 2015

? EVMSIG to be DOD's "authoritative source" for assessing EVMS compliance to the 32 ANSI/EIA-748 Guidelines

? EVMS compliance according to EVMSIG depends on:

? Adequacy of EVMS system description

? Must address how the contractor's business processes and associated data meet the 32 ANSI/EIA748 Guidelines

? Proper implementation of EVMS as described in system description ? Timely, accurate, reliable and auditable EVMS data

? EVMSIG provides compliance guidelines for each of the 32 ANSI/EIA748 Guidelines

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Earned Value Management Systems: ANSI/EIA 748 Guidelines

? Organization (Guidelines 1-5)

? Consistent and rational approach for decomposing the program into manageable work breakdown structure (WBS) segments

? WBS levels extend to appropriate control accounts ? WBS revised to address authorized changes and modifications

? Integration of planning, scheduling, budgeting, work authorization and cost accounting processes with each other and with WBS

? Planning, scheduling and budgeting (Guidelines 6-15)

? Identification of objective indicators (products, milestones, or performance goals) that can be used to measure progress

? Establish time-phased budget baseline at control account level to measure program performance

? Establish budgets for authorized work with cost elements

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